Fase vegetativa:

Findings from the assessment indicated that there is need for faster and more reliable remittance systems in the two countries through improved reliable energy supply, such as fast tracking rural electrification.

According to the assessment, there is need to promote the use of remittance transfers through the post offices in Tanzania and Uganda in order to increase the volume of transactions and generate working capital to avoid delays of transactions due to shortage of funds to pay customers on demand.

With the increasing number of agents involved in funds remittance, and especially formal agents, it will be important to come with a system for monitoring and reporting the range of services and charges by different agents so that users can have informed decisions for using the different agents.

The Postal Corporations have been slow in making IFS services more popular among users who really need this service due to its cost effectiveness and rolling it out to remote districts. Success in rolling out domestic IFS network will also mean revamping the post office image as a service provider of preference.

Since the East African partner states have adopted plans to harmonize clearing systems for cross-border payments, it will be important for IFS to be integrated with systems in other banks that are coordinated by the Central Banks so that payments are done without resorting to the UPU head office for inter-bank payment clearing.

An area identified by the Bureau of Statistics is that of specifically recording and monitoring funds under the category of remittances to and from the Diaspora, which is currently lacking in the national statistics. Inflows from sources besides trade are recorded as income from tourism and other services.

Getting specific data on remittances was not a straightforward affair. The main focus of the databases of the money transfer agents is the understanding of (i) how much money has been transferred between their base country and other countries; (ii) what profit is obtained in such transactions; and (iii) retaining and attracting more customers to use their services. Their record keeping is therefore tailored to simply monitor business transactions.

The same applied to Central Banks whose main interest has been to monitor volume of funds coming and going out of the countries; with corresponding broad sectors generating the funds or going to use the exported funds. Their data bases do not have routines or even occasional analysis of understanding whether the funds are in the category of remittances as per the standard definition.

Because of the nature of data kept by the banks, an attempt to disaggregate the volume of funds transferred between the two countries by different systems to the level of personal remittance has been futile. The Central Banks required individual banks to report on the sector source of funds (export proceeds by category - manufactured goods, agricultural,

tourism etc.) and the purpose of sending money out (for imports by categories, medical, education etc.). No estimation of funds sent out or received as originating from the Diaspora as remittance.

Lack of national identification cards for Tanzanians and Ugandans rendered the exercise of customer identification more difficult and banks have been forced to rely on alternative means of paper identification like a letter from the local chief. This constrains commercial banks from relaxing their procedures for the KYC principle (“know your customer”), further pushing the migrants to resort to informal means of money transfer.

Migrants have experienced problems when sending funds home for investment purpose, mostly due to misuse of funds by relatives/friends or wrong choice of investment portfolio.

8.2 Recommendations

8.2.1 Policy and Legislation

(a) In order to develop an economic contribution of the Diaspora, government policies in both countries should reflect pro-Diaspora policies rather than discourage such as improving money transfer services and liberalize financial and investment laws. (b) Legalization allowing cross-border payment using mobile telephone to facilitate

money transfer- especially for persons in remote areas with long distances to formal remittance agents

(c) Legislation allowing limited amount of funds transfer through buses and courier agents would encourage instalment of safety mechanisms to prevent loss and theft of money otherwise sent via drivers or friends/relatives.

(d) The study found reports that the liberalization of financial markets in Uganda has had positive effects on remittances back to the country. As the trade in foreign exchange was allowed together with permission for foreign dominated banks to operate in Uganda, an increase of remittances back home had occurred. Hence, it is recommended that further research should be done to assess the correlation between liberalization of financial markets and remittances as well as looking into what investment opportunities should be created to enable Diaspora to invest in their country of origin.

8.2.2 Database and Monitoring Remittances

(a) Further research on remittances in each country to increase the general understanding of the relation between remittances and development and to identify effective policies needed to harness the development impact.

(b) Collating and disseminating information about formal remittance services offered by different operators and their costs. Use a range of media channels to inform the public.

(c) Recording and monitoring funds under the category of remittances to and from the Diaspora should be a mandatory requirement of all banks so that it can be correctly reported in the national accounts.

(d) Information about investment opportunities more available to the Diaspora and creating about those opportunities.

8.2.3 General Recommendations

(a) UPU and PAPU should strive to make IFS services more popular among users who really need this service due to its cost effectiveness and rolling it out to remote districts. This will also mean to revamp the post office image as a service provider of preference.

(b) The Tanzanian and Ugandan Governments should adopt a simplified EAC cross- border payment system using IFS and integrating it with other banks as coordinated by the Central Banks so that payments are done without resorting to the UPU Head Office for EAC interbank payment clearing.

(c) Agreeing on common approach for monitoring remittances so that the volume transacted is properly recorded and appropriately included as a separate sub-item in the national accounts.

8.2.4 Opportunities for Banks and Ministries

(a) In order to solve the problem of working capital post offices should enter into partnership with Banks. The current negotiations between the Tanzania Postal Bank and Tanzania Post Corporation in that direction should be given the necessary support by government. This initiative will help to generate working capital that will be used to promote the system.

(b) The boards of the Postal Corporations in Uganda and Tanzania must push for more aggressive promotion of the IFS since it is probably the most cost effective system in the long run when it comes to cross border payments penetrating deep in the villages.

(c) Since KYC policy by banks depends much on valid personal customers, the two governments should fast-track the issuance of national identification cards for Tanzanians and Ugandans.

(d) Filling forms and producing identification papers have been a source of frustration for many semi-literate customers. It will be important therefore to devise simple forms and easily understood language.

(e) Since migrants have experienced problems when sending funds home for investment purpose, mostly due to misuse of funds by relatives/friends or wrong choice of investment portfolio, the Banks should help to come with special products meant for the Diaspora, as already started by a few pioneer banks.

8.3 Interventions Required to Strengthen IFS

There was a general feeling that for the two Postal Corporations to effectively roll out IFS and offer competitive services the following type of interventions were needed, with cost estimates to capitalise 6 districts in each country presented based on computations done by Tanzania Postal Corporation.

(a) Manpower for operations of IFS:

- Trained manpower on IFS operations and those trained to attend refresher courses

on a regular basis to keep pace of technological changes. Part of the training should be an appreciation of the postal staff’s role in the improvement of household livelihoods and national economic development agenda so that they do not view their work as simply clerical or accounting task. Furthermore, the training should also provide them with sufficient knowledge about the IFS system to enable the postal staff to inform clients on the advantages of using the IFS system. There should be several people trained within each post office so that there is no vacuum in case one is sick or is transferred.

- Employment package: Improved salary scales for Postal Staff will lead to a more

motivated work force so as to curb on high staff turnover and in order to retain their employees who often go in search for better paying jobs on the market.

- National UPU IFS consultant: One of the complaints given by the staff involved in

running IFS in both countries was the lack of prompt response to solve daily technical problems they encounter. The regional IFS technical support person is unlikely to cope with the demand of providing such support if both Tanzania and Uganda are going to roll out IFS services to more districts. It was therefore recommended that each country should have a resident IFS technical support person who will work under the overall guidance of the regional IFS technical support coordinator.

(b) Equipment and Overhead for running of IFS includes: computers, modems, switches and cablings. Once established, each post office will need some funds to pay for operational costs in terms of salaries, electricity, water and internet charges to service providers, who can be mobile phones companies. There will be no need for Vsat dishes since almost all districts are now networked with mobile phone infrastructure, including those owned by Uganda and Tanzania Telecommunications.

(c) Capitalizing post offices is important to enable them:

• Install the necessary equipment and systems needed for efficient operation of IFS

• Adequate finance marketing and advertising campaigns to popularize electronic money transfer services will be required to restore the image of the post offices in order to regain the trust of its users.

• Improve their cash flow so that they promptly meet customer demand for cash payments

(d) Regular Backup from UPU/PAPU

• UPU will have to scale up its technical and financial support to national postal corporations so that they roll out and strengthen services. This could start with the support of posting one National IFS consultant for each country for a limited period of 3-5 years until when the IFS is running smoothly after solving both design constraints and national infrastructural and management system bottlenecks.

• UPU/PAPU should work closely with Postal Corporations to undertake regular Monitoring and Evaluation (M&E) and agree on remedial measures • A regional training on technical back up programme should be designed as

part of a strategy of ensuring IFS is successfully rolled out and entrenched as business

• There should be a continuity strategy for IFS framework so that the system is regularly updated to cope with the emerging technological opportunities and outsmarting other competing electronic remittance systems.

(e) Data capture and monitoring: The Postal Offices should have a reporting system that captures the amount of funds transmitted between the two countries with the rest of world and report that to the Central banks and Bureaus of Statistics.

ANNEXTURES